Q2 2025 Bentley Systems Inc Earnings Call

You have joined the meeting as an attendee and will be muted throughout the meeting.

Eric Boyer: Good morning and thank you for joining BENTLEY SYSTEMS Q2 2025 results. I am Eric Boyer, BENTLEY's Investor Relations Officer. On the webcast today, we have BENTLEY SYSTEMS Executive Chair Greg Bentley, Chief Executive Officer Nicholas Cumins, and Chief Financial Officer Werner Andre. This webcast includes forward-looking statements made as of August 6, 2025, regarding the future results of operations and financial position, business strategy and plans, and objectives for future operations of BENTLEY SYSTEMS Incorporated. All such statements made in or contained during this webcast, other than statements of historical fact, are forward-looking statements. This webcast will be available for replay on BENTLEY SYSTEMS Investor Relations website at investors.bentley.com on August 6, 2025. After our presentation, we will conclude with Q&A. Let me introduce the Executive Chair of BENTLEY SYSTEMS, Greg Bentley.

Werner Andre: Good morning and thanks to each of you for your interest in BSY. Please pardon my voice, which is suffering from a summer cold. CEO Nicholas Cumins and CFO Werner Andre will, as always, report in detail BENTLEY SYSTEMS INC's continued excellent operating and financial results for 2025 Q2 and thus for the first half of 2025, as we track consistently towards our outlook range for this full year. Earlier this year, in reviewing 2024 Q4, I looked back over the years since BSY's IPO in 2020 to quantify that our outlook range for 2025 would complete the process of at least doubling over these five years, each of our key financial metrics of ARR, revenues, adjusted operating income, less stock-based compensation, and free cash flows, while minimizing equity dilution.

Good morning, and thank you for joining Bentley Systems for the Q2 2025 results. I'm Eric Boyer, Bentley's Investor Relations Officer on the webcast. Today we have Bentley Systems Executive Chair, Greg Bentley; Chief Executive Officer, Nicholas Cummins; and Chief Financial Officer, Werner Andre. This webcast includes forward-looking statements made as of August 6, 2025, regarding the future results of operations and financial positions, business strategy, and plans and objectives for future operations of Bentley Systems Incorporated. All such statements made during this webcast, other than statements of historical fact, are forward-looking statements. This webcast will be available for replay on Bentley Systems' Investor Relations website at investors.bentleysystems.com on August 6, 2025. After our presentation, we will conclude with a Q&A session. And with that, let me introduce the Executive Chair of Bentley Systems, Greg Bentley.

Good morning and thanks to each of you for your interest in bsy, please, pardon my voice which is suffering from the summer cold.

CEO, Nicholas and CFO veror will, as always report in detail, Bentley systems continued, excellent, operating and financial results for 25 q. And thus for the first half of 2025 as we track consistently towards our Outlook range for this full year.

Earlier this year in reviewing 24 Q4, I looked back over the years since Psy IPO in 2020 to quantify that our Outlook range for 2025 would complete the process of at least doubling over these 5 years. Each of our key financial metrics of ARR revenues adjusted operating income less stock-based compensation and free cash flows while minimizing Equity dilution.

Werner Andre: Most recently, in reviewing 2025 Q1, I likewise looked back five years to quantify the respects in which we've purposefully gained further business resilience over this span. It is even more clear this quarter that we're currently benefiting from those improvements. Our excellent operating performance to date in 2025 is in keeping with a primary sustaining long-term growth driver over this period, and which will prevail foreseeably. Going digital has become the enduring priority for infrastructure engineering, in particular because of pervasive resource constraints. To keep up with the world's imperatives for infrastructure performance, resilience, and adaptation, each BSY user and account needs each year to achieve step functions in productivity and value generation through enhanced utilization of software, cloud services, and AI.

Then most recently in reviewing 25 Q 1. I likewise looked back 5 years to quantify the respects in, which we've purposefully gained further business resilience over the span.

It is even more clear this quarter that we're currently benefiting from those improvements.

Our excellent operating performance to date in 2025, is in keeping with a primary sustaining long-term growth driver over this period, and which will prevail foreseeable.

Going digital has become the enduring priority for infrastructure engineering, in particular because of pervasive resource constraints.

To keep up with the world's imperatives for infrastructure, performance, resilience, and adaptation each bsy user and account needs each year to achieve step functions and productivity and value generation through enhanced utilization of software, cloud services and AI.

Werner Andre: To help quantify such progress in software consumption per engineer, I would like now to again, but for the last time, I think, look back over five years, but this time with reference to external market data. This slide, which we still use in our intro deck today, shows global counts of engineers and related technicians and their software expenditures as tabulated by UK global research firm Cambashi. Conveniently, for our purpose of monitoring the long-term trend, this last data that we had on engineering employment and spending is for 2019, immediately preceding BSY's IPO. We originally compared spending per engineer/technician for infrastructure engineering to that of product engineering to glean a data point for the market potential headroom.

To help quantify such progress in software, consumption per engineer.

I would like now to again, but for the last time I think look, back over 5 years, but this time with reference to external Market data,

this slide which we still use in our intro deck today shows Global counts of Engineers and related technicians and their software expenditures as tabulated by UK Global Research firm kmashi

Conveniently for our purpose of monitoring the long-term trend, the last data we had on engineering employment and spending is from 2019, which is immediately preceding. Bsy is IPO.

Werner Andre: For the purpose of this look-back, let's examine the changes in just infrastructure engineering spending over time, as Cambashi has just provided an update which slightly refines 2019 and which, most importantly, introduces the most recent year for which this data, including engineering employment, is available: 2023. I do not find it surprising that over these four years, the total number of infrastructure engineers and supporting technicians has only increased by about 1% per year on average. While there isn't sufficient granularity in both data sets to establish this, I believe that even this nominal increase is concentrated in less developed countries, while I believe that in countries like the U.S., infrastructure engineering retirements have exceeded new graduates. Most significantly, Cambashi finds that software spending by infrastructure engineers/technicians has grown at a compounded annual growth rate of about 10% over this period. This is in nominal rather than constant currencies.

we originally compared spending per engineer technician for infrastructure, engineering to that of product, engineering to glean a data point for the market potential Headroom,

But now for the purpose of this look back let's examine the changes in just infrastructure engineering spending over time as kmashi has just provided an update, which slightly refined 2019 and which most importantly, introduces the most recent year for which this data including engineering employment is available 2023.

I do not find it surprising that, over these four years, the total number of infrastructure engineers and supporting technicians has only increased by about 1% per year on average.

Werner Andre: Cambashi's estimate is that the constant currency growth rate was a full percent higher. By virtue of BSY's constant currency revenue growth rate during the period, we somewhat outgamed this broader market. Hence, software spending per infrastructure engineer/technician has grown about 9% in nominal currencies, or indeed approximately 10% in constant currencies over this period. Even so, the $514 annually per engineer or technician tends to appear low compared to averages for BSY users. For this newly available 2023 data, Cambashi has provided refinements for better understanding. To start with, we can now focus on employment and spending just for engineers rather than also including the technician categories, which are rather miscellaneous and less representative of BSY's primary user profile. See here Cambashi's observation that in 2023, 17.6 million infrastructure engineers globally spent $10.2 billion on engineering and GIS software, averaging a relatively higher annual spending of $579 per engineer.

Most significantly kobashi finds that software spending by infrastructure Engineers technicians has grown at a compounded annual growth rate of about 10% over this period. And this is in nominal, rather than constant currencies kmashi estimate is that the constant currency growth rate was a full percent higher.

By virtue of BS, wise constant currency Revenue growth rate during the period. We somewhat out gain this broader Market.

Hence, software spending per infrastructure, engineer technician, has grown about 9% in nominal, currencies or indeed, approximately 10% in constant currencies over this period.

Even so, the $514 annually per engineer or technician tends to appear low compared to averages for busy users.

Usually, for this newly available 2023 data can Bashi has provided refinements for better understanding

To start with, we can now focus on employment and spending Just For Engineers rather than, also, including the technician categories, which are rather miscellaneous, and less representative of bsy primary user profile.

Werner Andre: For this new 2023 data, Cambashi also provides analysis of employment and spending down to the level of countries classified together within the five quintile tiers of per capita GDP. The wide variation in average spending is striking to me. The engineers in the most developed, level one countries, while nearly the least numerous, spend the significant plurality of the global total, averaging over $1,900 per year per engineer. This is generally consistent with BSY's average and globally uniform pricing and utilization for E365. The numerical bulk of infrastructure engineers in less developed country levels represent a multiple of long-term upside opportunity, as they inevitably will tend to catch up in going digital and in expenditures to do so.

See, here, can batteries observation that in 2023, 17.6 million, infrastructure, Engineers globally, spent 10.2 billion dollars on engineering and GIS software averaging. A relatively higher annual spending of 579 per engineer.

for this new 2023 data, cam Bashi also provides analysis of employment and spending down to the level of countries classified together within the 5 quintillion

The wide variation in average spending is striking to me.

the engineers in the most developed level 1 countries, while nearly the least numerous

Spend the significant plurality of the global total averaging over 1900 per year per engineer.

this is generally consistent with BS wise, average and globally uniform pricing and utilization for e365

So the numerical bulk of infrastructure engineers and less developed country levels represents a multiple of long-term upside opportunity as they inevitably, will tend to catch up and going digital and in expenditures to do so.

Werner Andre: Coming back to Bentley Systems and our standing as the market leader in so many infrastructure engineering market segments, as we show in our own assessment of the competitive landscape in this slide from our intro deck, let's examine Cambashi data to understand how so much of this $10 billion in software spending by infrastructure engineers obviously goes elsewhere than to BSY. To do this, let's parse the full $14 billion of now 2024 software revenue, which Cambashi ascribes to BIM. This term originally referred to building information modeling decades ago, but has come to connote, as here, a catch-all for what could otherwise be described as AEC, for architecture, engineering, and construction, as opposed to product engineering or manufacturing. Within this total, BIM design is not only the largest submarket, but we believe it is the prerequisite to success throughout the others.

Now, coming back to Bentley Systems and our standing as the market leader in so many infrastructure engineering market segments, as we show in our own assessment of the competitive landscape in this slide from our intro tech. Let's examine Kmashi data to understand how so much of this $10 billion in software spending by infrastructure engineers obviously goes elsewhere and to be easy.

to do this. Let's parse the full 14 billion dollars of now, 2024 software Revenue which came back, she ascribes to Bim

This term originally referred to building information modeling decades ago, but has come to connote as here a catchall for what could otherwise be described as aec for architecture, engineering and construction as opposed to product engineering or Manufacturing?

Werner Andre: The greatest ultimate opportunity is for digital twins to support infrastructure operations and maintenance. Although this submarket is only nascent so far, we think our asset analytics initiative portends its comparatively unlimited potential monetized per asset rather than per engineer. The potential compounding value of a digital twin depends significantly upon its assimilation of the digital context, digital components, and digital chronology from BIM design. So here, per Cambashi, are the market shares within the $6.5 billion of BIM design revenues. The largest by far is for Autodesk, followed significantly by Bentley, Schneider, Hexagon, Nemetschek, Trimble. In all China, I have grouped together all the Chinese companies identified by Cambashi, listed here in the fine print.

Within this total, BIM design is not only the largest submarket, but we believe it is the prerequisite to success throughout the others.

The greatest ultimate opportunity is for digital twins to support infrastructure operations, and maintenance.

Although this submarket is only Nason so far. We think our asset analytics initiative portends, its comparatively unlimited potential monetized per asset rather than per engineer.

But the potential compounding value of a digital twin depends significantly upon its assimilation of the digital context, digital components, and digital chronology, from Bim design.

Werner Andre: To help understand the widely varied mix across infrastructure segments per competitor within BIM design, Cambashi analyzes each company's such revenues by product category within plant, architectural, which includes mechanical, electrical, and plumbing, or MEP, civil, and structural. Looking here at the relative proportions for each company, one sees that every one of these putative competitors has a considerably different primary focus than Bentley Systems. At Bentley Systems Inc, we do not break out product revenues in these same categories, and I suspect that Cambashi's estimates here seem to discount Seequent's major share of geotechnical and environmental software used in civil engineering. While we have a comprehensive portfolio across all disciplines required for major infrastructure projects, including their plant and building engineering aspects, our focus is characterized by civil and supporting structural products, primarily for horizontal infrastructure networks.

Cross infrastructure. Segments per competitor within Bim design can bash a analyzes. Each company's such revenues by product category within plant architectural, which includes mechanical electrical and plumbing, or MEP civil. And structural looking here at the relative proportions for each company. 1 seese.

At Bentley systems, We Don't Break Out product revenues in these same categories and I suspect that kmashi estimates here seem to Discount sequence, major share of geotechnical and environmental software used in civil engineering.

Werner Andre: By contrast, Hexagon and Schneider's design products are clearly focused primarily on plant engineering. Nemetschek's design products are concentrated in architectural/MEP. Trimble's design products are primarily divided between architectural MEP and structural to support such buildings. China has more or less official state-owned software for its country-specific structural analysis codes, and many competitors for buildings software. Finally, the primary design product focus for our principal competitor Autodesk is architectural/MEP for vertical infrastructure buildings. Within Autodesk's civil product share, its offerings for civil site design, likewise associated with buildings, loom large. As you may recall, we at BSY see this as a substantial competitive upside opportunity. Our BIM design software peers and competitors are worthy and resourceful. While our space is desirable and envied, each of these others has a principal focus that is clearly different.

While we have a comprehensive portfolio across all disciplines required for major infrastructure projects, including their plant and building engineering aspects, our focus is characterized by civil and supporting structural products primarily for horizontal infrastructure networks.

By contrast hexagon and Schneider's design products are clearly focused primarily on plant engineering.

Then it checks design products are concentrated in architectural MEP.

Trimble's design, products are primarily divided between architectural map and structural to support such buildings.

China has more or less official state-owned software for its country specific, structural analysis codes and many competitors for buildings software.

Finally, the primary design product Focus for our principal competitor or task is architectural /.

For vertical infrastructure building.

Within Autodesk civil products, share its offerings for civil site design, likewise associated with buildings, Loom large. And, as you may recall, we at bsy see this as a substantial competitive upside opportunity.

Our bin design, software peers and competitors are worthy and resourceful.

Werner Andre: I believe that we are favorably differentiated by virtue of our established franchise as the outright market leader in comprehensive infrastructure engineering software, particularly for the horizontal networks of public works/utilities, grids, roads and bridges, rail and transit, water and wastewater, and resources, and the geoprofessional disciplines, structural disciplines, and project delivery collaboration across all of this. Given the world's prevailing imperatives for infrastructure performance, resilience, and adaptation, I would not trade positions with any design software peer or competitor. Notwithstanding this favorable competitive backdrop, our consistent execution should not be taken for granted, and I commend our management and colleagues for Q2. Over now to Nicholas. Thank you.

While our space is desirable and envied each of these others have a principal Focus, that is clearly different.

I believe that we are favorably differentiated by virtue of our established franchise as the outright market leader in comprehensive infrastructure engineering software, particularly for the horizontal networks of Public Works. Utilities grids roads, and bridges Rail, and Transit Water, and Wastewater, and resources, and the Geo professional disciplines structural disciplines and project delivery collaboration across all of this.

Given the world's prevailing imperatives for infrastructure, performance resilience and adaptation, I wouldn't trade positions with any design software peer or competitor.

Now, withstanding, this favorable competitive backdrop.

Our consistent execution should not be taken for granted and I commend our management and colleagues for 25 Q.

Nicholas Cumins: Thank you, Greg. We delivered another strong quarter despite ongoing global uncertainties. This performance underscores the resilience of our business model and the strengths of our end markets driven by secular infrastructure investment. As demand for better and more resilient infrastructure continues to outpace the available engineering resource capacity, our software plays a crucial role in helping infrastructure engineers achieve more with less. Our strong first half performance reinforces our confidence in meeting our full-year outlook based on low double-digit AR growth, continued margin expansion of approximately 100 bps, and robust free cash flow generation, consistent with our long-term financial framework. Turning to Q2 highlights, AR grew 11.5% year over year and 12% when excluding the impact of China. Growth in the quarter was underpinned by a net revenue retention rate of 109%. E365 continues to be a growth driver, with renewals consistently reflecting stronger commitment levels.

Over now to Nicholas. Thank you.

Thank you, great.

We delivered another strong quarter despite ongoing global uncertainties.

This performance underscores the resilience of our business model and the strength of our end markets driven by secular infrastructure investment.

As demand for better and more resilient infrastructure continues to outpace the available engineering resource capacity.

Our software plays a crucial role in helping infrastructure engineers achieve more with less.

Our strong first half performance reinforces our components. In meeting our full year outlook, based on low double-digit. Our growth continued margin expansion of approximately 100 basis points and robust free cash flow generation consistent with our long-term Financial framework.

Turning to Q2 highlights are grew 11.5% year-over-year and 12%. When including the impact of China.

Growth in the quarter, was underpinned by net revenue, retention rates of 109%.

Each 3655 continues to be a growth driver.

Nicholas Cumins: The willingness of accounts to commit to higher contractual floors in return for corresponding ceilings signals their confidence in the strength and sustainability of their own demand environment. In Q2, we once again added 300 bps of AR growth from new logos, primarily within the SMB segment. For the 14th consecutive quarter, we added more than 600 new SMB logos through our line store. Retention within the segment remained high, further signaling confidence in the demand environment, this time from smaller accounts that are arguably more sensitive to economic uncertainty. Turning to our tone of business by infrastructure sector, resources was our fastest growing sector this quarter, with Seequent delivering a particularly strong performance. Notably, growth for Seequent was led by mining, outpacing civil for the first time in six quarters.

With renewals consistently reflecting stronger commitment levels.

The wedding net of accounts to commit to higher. Contractual floors in return, for corresponding feelings. Signals their confidence in the strength and sustainability of their own demand environment.

And for the 14th consecutive quarter, we added more than 600 new SMB logos for online store.

Retention within the segments, remain high.

Further signaling confidence in the demand environment. This time from smaller accounts that are arguably more sensitive to economic uncertainty.

Turning to our tone of Business by infrastructure sector.

Resources was our fastest growing sector. This quarter with a seequent, delivering, a particular, strong performance.

Nicholas Cumins: While we are seeing early signs of improvement in mining exploration, it is still too soon to call it a market recovery. Public works utilities delivered another solid quarter, performing in line with the company overall, supported by sustained global infrastructure investment. The needed focus on grid resilience is particularly benefiting Power Line Systems. Growth in the industrial sector remained modest, while commercial facilities were flat. Performance across regions in Q2 remained largely consistent with prior quarters. Growth in America was once again solid, with Latin America continuing to stand out. In the U.S., our accounts remain confident in their outlooks for the year, despite ongoing uncertainty related to tariffs, policy shifts, and regulatory changes. There is also increased optimism that Congress will now prioritize meaningful permitting legislation.

Notably growth for sequin was led by mining outpacing civil, for the first time in 6 quarters.

While we are seeing early signs of improvement in mining exploration. It is still too soon to call it a market recovery.

Public Works, utilities delivered. Another solid quarter performing in line with the company of role supported by sustained Global infrastructure investment.

The needed focus on grid resilience is particularly benefiting power line systems.

Growth in industrial sector remained modest.

While commercial facilities was flat.

Performance across regions in Q2, remain largely consistent with prior quarters.

Growth in America was once again solid with Latin America continuing to stand out.

In the US, our accounts remain confident in their outlooks for the year despite ongoing uncertainty related to tariffs policy shifts and Regulatory changes.

Nicholas Cumins: The combination of executive orders, updated agency guidelines, recent court rulings, and bipartisan state-level initiatives all signal momentum towards comprehensive permitting reform, particularly in areas such as transmission, critical minerals, and other strategic verticals. Our Power Line Systems and Seequent businesses, both standout growth drivers since their acquisition 3.5 and 4 years ago, respectively, are especially well positioned to benefit from these developments. Also noteworthy, Congress has already begun working on the surface transportation reauthorization of the IIJA, a year and a half before its scheduled expiration, a clear indication that civil infrastructure investment remains a national priority. In EMEA, we delivered another quarter of solid growth, with the Middle East continuing to lead the region, followed by the U.K. Investment remains strong across transportation, energy, and water infrastructure, while momentum continues to build in defense-related projects, data centers, and nuclear. Together, these trends reflect a broadening base of demand.

There's also increased optimism that Congress will now prioritize meaningful permitting legislation.

The combination of executive orders, updated agency, guidelines. Recent court rulings and bipartisan, state, level initiatives, all signal momentum, towards comprehensive permitting reform. Particularly in areas such as transmission, critical minerals and other strategic verticals.

Our power line systems and sequent. Businesses, both stand out clothes drivers since the acquisition 3.5 and 4 years ago, respectively, or especially well positioned to benefit from these developments,

Also not worthy. Congrats has already begun working on the surface transportation reauthorization of the IJ.

A year and a half before its scheduled expiration a clear indication that civil infrastructure investment remains a national priority.

In EMA, we delivered another quarter of solid growth with the Middle East, continuing to lead the region, followed by the UK.

Investment remains strong across Transportation energy and water infrastructure.

While momentum continues to build in defense related projects.

Data centers and nuclear.

Nicholas Cumins: Recent announcements in the U.K. and Europe point to a continued supportive funding environment into the foreseeable future. In June, the U.K. government published its 10-year infrastructure strategy, which earmarked £725 billion in long-term funding and aims to attract private investment into its national infrastructure. In July, the European Commission put forward its €1.8 trillion proposal for the next long-term EU budget for 2028 to 2034. The proposal clearly prioritizes investment in infrastructure and should be a continued tailwind for funding in years to come. In Asia-Pacific, the overall performance remains steady. India continues to stand out with positive sentiment across strategic national programs in water and power. ANZ was softer, primarily due to a slowdown in transportation spending in Australia.

Together, these Trends, reflect a broader base of demand.

Recent announcements in the UK and Europe point to a continued supportive, funding environment into the foreseeable future.

In June, the UK government published its 10-year infrastructure strategy, which earmarks £725 billion in long-term funding and aims to track private investment into its national infrastructure.

And in July the European commission put forward its 1.8 trillion Euros, proposal for the next long-term EU budget for 2028 to 2034

The proposal clearly prioritizes investment in infrastructure and should be a continued tailwind for funding in years to come.

In asia-pacific the overall performance remains steady.

India continued to stand out with positive sentiment across strategic national programs in water and power.

Nicholas Cumins: However, we are well positioned to support major infrastructure projects tied to the 2032 Brisbane Olympics, some of which, like Cross River Rail, are already in progress, with broader activity expected to ramp up near term. China performed in line with our expectations, given ongoing economic and geopolitical headwinds, and now represents only about 2% of total ARR. Finally, I want to highlight the success of our first-ever Cesium developer conference, which brought more than 400 attendees from around the world to Philadelphia. We acquired Cesium for its market-leading 3D geospatial platform, its talent, and its vibrant developer community. All three were on display at the conference. Bentley users represented it from technology leaders like Google and NVIDIA, and developers spanning verticals from AEC to government to aerospace learned how we are bringing iTwin capabilities to Cesium, including reality modeling and AI-based feature detection services.

AMD was software primarily due to a Slowdown in transportation spending in Australia.

However we are well positioned to support major infrastructure projects tied to the 2032 Brisbane Olympics.

Some of which, like Cross River Rail are already in progress with broad activity. Expected to ramp up near-term.

Sign up performing in line with our expectations given ongoing economic and geopolitical headwinds. And now we present only about 2% of total are

Finally, I want to highlight the success of our first ever season that of our conference, which brought more than 400 attendees from around the world to Philadelphia.

We acquired season for its Market leading 3D geospatial platform. It's Thailand and its vibrant developer community.

All 3 were on display at the conference.

Nicholas Cumins: Attendees also shared the many ways they are using Cesium to deliver powerful 3D geospatial experiences in applications for the built and natural environment. One example is HNTB, an engineering firm that leverages Cesium and Google's 3D photo recitals to provide precise geospatial context, enabling better-informed decisions for infrastructure design. With this capability, stakeholders can assess projects ranging from single highway interchanges to 30-mile road and rail corridors with greater clarity. By using Cesium, HNTB has reduced the effort required to model existing buildings for contextual detail on long linear projects by up to 80%. We are excited about the opportunities ahead to expand the Cesium developer community and empower it with additional iTwin platform capabilities.

from technology leaders, like Google and Nvidia and developers spending verticals from AC to government to Aerospace, learn how we are bringing in capabilities to cesium including reality modeling and AI based feature detection services,

Attendees. Also share the many ways they're using cesium to deliver powerful 3D geospatial experiences in applications for the build and natural environments.

1 example is hmtd in engineering firm That leverages season and Google's 3D photo reset tiles to provide precise geospatial context enabling better informed decisions for infrastructure design.

With this capability, stakeholders can assess projects ranging from single highway interchanges to 30 m road and rail corridors with greater clarity.

by using cesium hntb has reduced the effort required to model existing buildings for contextual detail on Long linear projects by up to 80%

Nicholas Cumins: We look forward to sharing the progress we have made integrating Cesium across our broader product portfolio at our upcoming year infrastructure conference this October in Amsterdam, alongside advancements in AI and Bentley Infrastructure Cloud. With that, I will turn it over to Werner.

We are excited about the opportunities ahead to expand the CDM, developer community, and Empower it with additional iTune platform capabilities.

And we look forward to sharing the progress. We've made our broader product portfolio at our upcoming year. Infrastructure conference. This October in Amsterdam, alongside advancements in Ai and bend the infrastructure cloud.

Werner Andre: Thank you, Nicholas. We've had a strong first half of the year and are well positioned with respect to our financial outlook range for the year. Total revenues for the second quarter were $364 million, up 10% year over year on a reported basis and 9% on a constant currency basis. Year to date, total revenues grew 10% on a reported and constant currency basis. For the first quarter and year to date, strong growth in subscription revenues was partly offset by a reduction in professional services and to a lesser extent in license revenues. Subscription revenues now represent 92% of total revenues, up two percentage points from the same periods last year, reflecting improvement in the overall quality of our revenues visibility, growth consistency, and margin contribution. Subscription revenues grew 12% year over year for the quarter in reported and 11% in constant currency.

And with that, I will turn it over to Vernor.

Thank you, Nicholas. We've had a strong first half of the year and are, well, positioned with respect to our financial Outlook range for the year.

Total revenues for the second quarter were 364 million up. 10% year-over-year on the reported basis and 9% on the constant currency basis year to date total revenues grew 10% on the reported and constant currency basis.

For the first quarter and the year to date strong growth in subscription revenues was partly offset by a reduction in Professional Services and to a lesser extent in licensed revenues.

Subscription revenues now. Represent 92% of total revenues up 2% points from the same period last year.

Reflecting Improvement in the overall quality of our revenues visibility growth, consistency and margin contribution.

Werner Andre: For the first half, more normalized for mix and timing, subscription revenues grew 12% on a reported and constant currency basis. Our SMB and E365 initiatives continue to be solid contributors. Perpetual license revenues for the quarter were $10 million, down $1 million year over year. Perpetual license sales make up only 3% of total revenues and will remain small relative to our recurring revenues. Our less predictable professional services revenues declined 7% for the quarter in reported and 9% in constant currency and now represent 6% of total revenues, down one percentage point from the same period last year. It is still the case that the largest portion of these non-recurring services relate to maximal implementation and upgrade work.

Subscription revenues crew, 12% over here for the quarter and reported and 11% in constant currency.

And for the first half, more normalized for mix and timing.

Subscription revenues crew. 12% on a reported end constant currency basis.

Our SMB and e365 initiatives continue to be solid contributors.

Perpetual licensed revenues for the quarter were 10 million done, 1 million euro a year.

Perpetual licensing, sales make up only 3% of total revenues and will remain small relative to our recurring revenues.

Our last predictable, Professional Services, revenues declined 7% for the quarter in reported and 9% in constant currency.

And now represents 6% of total revenues down 1% percentage point from the same period last year.

It is still the case that the largest portion of these non-recurring Services, relate to IVM, maximum implementation, and upgrade work.

Werner Andre: Our last 12 months' recurring revenues, which include subscriptions and a small amount of recurring services, increased by 13% year over year in reported and in constant currency and represent 92% of our last 12 months' total revenues, up two percentage points year over year. Our last 12 months' constant currency account retention rate remained at 99%, and our constant currency net retention rate rounded down to 109%, led in magnitude by a creation within our consumption-based E365 commercial model. We ended Q2 with ARR of $1,379,000,000 at quarter and spot rates. On a constant currency basis, our year-over-year ARR growth rate was 11.5%, consistent with our expectations. Excluding China, our year-over-year constant currency ARR growth rate was 12%. China is now 2% of our total ARR.

our last 12 months, recurring revenues, which includes subscriptions, and a small amount of recurring, Services increased by 13% year-over-year being reported and in constant currency and represent 92% of our last 12 months, total revenues up 2%, each points, year-over-year

Our last 12 months, constant currency account, retention rate, remained at 99%.

And our constant currency. Net retention rate, rounded down to 109% Less in magnitude by accretion within our consumption based e365 commercial model.

The amplitude with ARR of 1 billion, 379 million at quarter and spot rates.

On a constant currency basis, our year-over-year Ark growth rate was 11.5%.

Consistent with our expectations.

Excluding China, our year-over-year constant currency. ER, growth rate was 12%.

China is not 2% of our total are.

Werner Andre: On a quarterly sequential basis, our constant currency ARR growth rate was 2.7%, slightly below our 2024 Q2 sequential growth rate of 2.9%, impacted by the timing of programmatic acquisitions and AssetWise analytics deals. With regards to seasonality, we expect 2025 Q3 to be our seasonal low quarter for year-over-year ARR growth due to the timing of potential acquisitions and anticipated AssetWise analytics deals, which were particularly strong in 2024 Q2 and 2024 Q3 to be closer to year-end in 2025. The favorable impact from onboarding the Cesium acquisition will be dropping off in 2025 Q3. Our GAAP operating income was $84,000,000 for the second quarter and $200,000,000 year to date. I've previously explained the impact on our GAAP operating results from the third compensation plan liability revaluations and acquisition expenses.

On the error proof, rate was 2.7%.

Slightly below a 24 Q, sequential growth rate of 2.9%.

Impacted by the timing of programmatic Acquisitions and asset analytics deals.

With regards to seasonality, the expect 25q 32, be our seasonal low quarter for year-over-year, our growth due to the timing of potential Acquisitions and anticipated asset analytics deals, which were particularly strong in 24q, and 24. Q3 to be closer to year end in 2025.

And the favorable impact from onboarding, the come acquisition will be dropping off in 25 Q.

Our gaap operating income was 84 million for the second quarter and 200 million year to date.

Werner Andre: Moving on to adjusted operating income, less stock-based compensation expense, our primary profitability and margin performance measure, adjusted operating income less SPC expense was $105,000,000 for the quarter, up 10% year over year, with a margin of 28.9%, up 10 basis points. Year to date, adjusted operating income less SPC expense was $231,000,000, up 11%, with a margin of 31.5%, up 40 basis points. Our margin performance for Q2 and year to date has been strong, particularly when considering that the year ago period benefited from head cost run rate savings associated with the 2023 Q4 strategic realignment program. Our 2025 Q2 margin benefited from our mix shift towards higher margin subscription revenues and from certain discretionary OpEx spend being slightly more back-half loaded in 2025 when compared to 2024. We remain confident about delivering our 100 basis points full-year margin improvement target.

I've previously explained the impact on our gaap. Operating results from the third Compensation Plan, liability, revaluations and acquisition expenses.

Moving on to adjusted operating income, less stock, based compensation expense our primary profitability, and bargaining performance measure.

At trusted operating income. Less SPC, expense was 105 million but it water up. 10% year-over-year with a margin of 28.9% up 10 basis points.

Year to date, adjusted operating income, less SPC, was $231 million, up 11%, with a margin of 31.5%, an increase in basis points.

Our margin performance for Q2 and year to date has been strong. Particularly when considering that the year ego periods, benefited from head cost, run receiving associated with the 23. Q4 strategic realignment program.

Our 25 Q marching benefited from our mix shifts towards higher margin, subscription revenues.

and from certain discretionary, Opex spent being slightly more backup loaded in 2025, when compared to 2024,

Werner Andre: As a reminder, our OpEx seasonality is always more heavily weighted towards the second half, with our annual raises occurring as of April 1 each year, and our larger promotional and event-related costs also concentrated in the second half of the year. Our free cash flow was $57,000,000 for the quarter and $273,000,000 year to date. This is generally consistent with our expectation that based on our seasonality of collections and expenditures, free cash flow for the first half would be on the order of 60% of our full-year free cash flow outlook of $415,000,000 to $455,000,000. In addition, we estimate that our second half of 2025 will see cash tax benefits in the range of $15,000,000 from the recently enacted One Big Beautiful Bill, primarily attributable to the restoring of immediate U.S. tax deductions for domestic R&D expenses.

you remain confident about delivering our 100 basis points full year, margin Improvement targets,

As a reminder, our Opex seasonality is always more heavily weighted towards the second half.

If our annual races occurring, as of April 1, each year and our larger Promotional and event related costs. Also concentrated in the second half of the year.

Our free cash flow was 57 million, 40 quarter and 273 million years a date.

This is generally consistent with our expectation that based on our seasonality of Collections and expenditures free cash flow for the first half would be on the order of 60% of our full year. Free cash flow Outlook of 415 to 455 million.

Werner Andre: As a result of this tax policy change, we are raising our 2025 free cash flow outlook to a range of $430,000,000 to $470,000,000 from previously $415,000,000 to $455,000,000. With regards to capital allocation, along with providing sufficiently for our growth initiatives during the first half of the year, we deployed free cash flow as follows: $135,000,000 fully paying down our senior debt, $75,000,000 in effective share repurchases to offset dilution from stock-based compensation, $10,000,000 in convertible senior notes repurchases, and $42,000,000 on dividends. With our senior debt being fully paid down, our net debt leverage, including all of our 2026 and 2027 convertible notes as debt, was 2.4 times adjusted EBITDA, down from 2.9 times at the end of 2024. Our strong balance sheet and projected free cash flow generation will sufficiently fund our dividend, share repurchases, and growth initiatives, including potential programmatic acquisitions.

In addition, we estimated our second half of 2025 will see cash tax benefits in the range of 15 million. From the recently, enacted 1, big, beautiful Bill, primarily attributable to the restoring of immediate us tax deductions for domestic R&D expenses.

As a result of this tax policy change, we are raising our 2025 free cash flow Outlook to a range of 430 to 470 million from previously, 415 to 455 million.

With regards to Capital location.

Along with providing sufficiently for our growth initiatives.

During the first half of the year, we deployed free cash flow as follows.

135 million fully paying down our senior debt.

75 million in effective, share repurchases to offset dilution from stock-based. Compensation, 10 million in convertible, senior notes, repurchases,

And 42 million on dividends.

With our senior debt being fully paid down, our net debt leverage, including all of our 2026 and 2027 convertible notes as debt, was 2.4 times, down from 2.9 times. At the end of 2024,

Werner Andre: Our five-year senior secured credit agreement, dating from October 2024, provides a currently undrawn $1.3 billion revolving credit facility. Combined with our strong balance sheet and anticipated future free cash flow generation, this affords sufficient flexibility, if needed, to refinance the January 2026 maturity of $678,000,000 in outstanding convertible debt, while keeping our cash interest thereafter at about the same magnitude as in the recent past. Interest rates on our debt are protected for very low coupons on our convertible notes and very favorable terms on our $200,000,000 interest rate swap expiring in 2030. Finally, with regards to our outlook for the year, our financial performance for 2025 Q2 puts us in a solid position to deliver within our annual outlook range for ARR growth, revenues, profitability, and now increased free cash flow. With regards to foreign exchange rates, for the second quarter, the U.S.

Our strong balance sheet and projected free. Cash flow generation will sufficiently fund. Our dividend share repurchases and growth initiatives, including potential, programmatic acquisitions.

Dating from October 2024.

Provides a currently undrawn 1.3 billion revolving credit facility.

Combined with our strong balance sheet and anticipated future free, cash flow generation. This is a fourth sufficient flexibility if needed to refinance the January 2026 maturity of 678 million in outstanding convertible debt.

While keeping our cash interest thereafter at about the same magnitude as in the recent past.

Interest rates on our debt are protected for very low coupons on our convertible notes.

And very favorable terms on our 200 million interest rates were expiring in 2030.

And finally, with regards to our outlook for the year,

our financial performance for 25 Q.

Photos in a solid position to deliver within our annual Outlook range. For our growth, revenues profitability, and now increased free cash flow.

With regards to foreign exchange rates.

Werner Andre: dollar has weakened relative to the exchange rates assumed in our 2025 annual financial outlook, resulting in approximately $7,000,000 of incremental revenues from currency and the total first half favorable impact of approximately $8,000,000. Based on more recent rates, where the U.S. dollar has further weakened relative to our outlook rates, if end-of-July exchange rates would prevail throughout the remainder of the year, our second half GAAP revenues would be positively impacted by approximately $17,000,000 relative to the exchange rates assumed in our 2025 financial outlook. With that, we are ready for Q&A. Over to Eric to moderate. Thank you.

For the second quarter the US dollar has weakened relative to the exchange rates assumed in our 2025 annual Financial Outlook resulting in approximately 7 million of incremental revenues from currency. And the total first half favorable impact of approximately 8 million.

Based on more recent rates where the US dollar has further became relative to our Outlook rates, if end of July exchange rates would Prevail throughout the remainder of the year.

Our second half get revenues would be positively impacted by approximately 17 million.

Relative to the exchange rates assumed in our 2025 Financial Outlook.

And with that, we are ready for Q&A.

Over to Eric to moderate. Thank you.

Eric Boyer: Thanks, Werner. Before we begin, I just wanted to remind everyone to please limit yourselves to one question so we can get to everybody today. Our first question comes from Matt Hedberg from RBC.

Thanks burner. Before we begin. I just wanted to remind everyone to please limit yourselves to 1 question so we can get to everybody today. Our first question comes from Matt Hedberg, from RBC

Greg Bentley: Great. Thanks, guys. I don't know if you can hear me OK.

Eric Boyer: Yes.

Greg Bentley: Thanks for the thanks for all the detail on the call. I wanted to ask about the macros. It sounded like in some of the prepared remarks that macros remain strong, and you called out specifically strength in SMB. I am curious, did you notice an improvement sequentially now that we are past some of the initial tariff uncertainty, or is this just kind of business as usual from your perspective?

Great. Thanks, guys. I don't know if you can hear me. Okay. Um, yes.

Uh, thanks for the, uh, thanks for the, thanks, for all the detail on the call. Um, I I wanted to ask about the macros, you know, it sounded like, you know, in some of the preferred remarks that macros remain strong and, and you called out specifically strength in SNB. I, I'm curious, um, you know, did you notice an improvement sequentially? Now that we're past some of the initial Tara uncertainty, or is this just kind of business as usual, you know, from, from your perspective.

Nicholas Cumins: Matt, I will take this one. I would say it is very consistent. It is a very consistent environment from the standpoint of all the investment that is going into infrastructure. Yes, there has been noise with tariffs. There has been noise with maybe change of priorities, et cetera. But overall, it is a very consistent environment. What we are hearing from our accounts is that they are very positive about their own outlook, whether they are big or small accounts. If there is one thing that is also quite consistent, it is the fact that there is really no problem with the demand. There is a problem with the capacity. They just do not have enough engineers.

Yeah. Matt, uh, I think this 1, um, I would say it's just very consistent, you know?

Um it's a very consistent uh environment from the standpoint of all the investment that is going into infrastructure.

And yes, there's been noise with tariffs, there's been noise with maybe change of priorities Etc, but overall, it's just a very consistent environment. What we're hearing from our accounts is that they are just very positive about their own Outlook

Nicholas Cumins: That remains the backdrop for our own demand environment, which is we are uniquely positioned to help them be more productive with the capacity that they have in order to cope with that demand.

Eric Boyer: Great. Thanks, Matt. The next question comes from Joe Vruwink from Robert Baird.

Great. Thanks, Matt. Uh, the next question comes from Joe Brewing from Robert B.

Speaker 6: Great. Thanks for the time this morning. I thought the TAM analysis was good at the start. One thing that comes to mind is that your products are typically thought of as the premium offering of various disciplines you serve. You know, premium because of functionality, but oftentimes that also comes with a certain price point. When you think about reaching the long tail of engineers that are spending below $1,000, let's say, do you have the right product set and right reach, right go-to-market model to effectively address?

Hi great. Thanks for the time this morning. Um, about the Tam analysis was good at this. Start 1 thing that comes to mind that your products are typically thought of as the premium offering and the V various disciplines, you serve, uh, and, you know, premium because of functionality. But oftentimes that also comes with a certain price point. When you think about reaching the long tail of Engineers that are spending below a thousand, let's say, do you have the right products that and right reach, right? Go to market model to effectively address

Nicholas Cumins: I think we have the full range. Our traditional product, MicroStation, by which we started the company, is the entry point for engineers to start working with our software. It remains one of the main growth drivers in SMB. I think that's quite telling, which is that's where we start. When we have accounts who start to use the MicroStation software, they become great targets for upsell to more sophisticated applications that will be more specific to certain assets or to a cross-sell with related engineering applications or collaboration software. We have the full range. Testament to that is just the continued growth that we see in SMB. There's just no slowing down. You heard it in the prepared remarks, more than 600 new logos for the 14th consecutive quarter. Very often, those new accounts that we're winning through SMB are actually starting with MicroStation.

I think we have you need the full range and um, you know, the the our our um, uh, traditional products, uh, microstation by which we started the company, um, is is really the entry points, uh, for engineers to start uh working with with our software and it remains 1 of the main growth drivers in SMB. So I think that's quite telling which is that's why we start and then when when we have accounts we start to use the microstation software, they become great targets for upsell to more sophisticated application, that will be more specific to certain, uh, assets,

Um, or to a cross sale with, uh, with uh related, uh, you know, engineering applications, um, or collaboration software.

So we have the full, the full range and then I mean, test them into that is just the continued growth that we see in SMD. There's just no slowing down. You heard it. Yeah. Uh, in the uh, in the, in the, in the prepared remarks, you know, more than than 600 new logos for the 14th consecutive quarter. You know? And again very often those New York Times that we're winning through SMD are actually starting with microstation.

Speaker 6: Thank you.

Eric Boyer: Thanks, Joe. Next question from Kristen Owen from Oppenheimer.

Thank you.

Speaker 6: Hi. Good morning. Thank you for taking the question. I want to double-click on some of the TAM analysis and ask you about the data center opportunity. Is there a way to understand the Bentley Systems' total addressable market there, whether it is through energy infrastructure, roads that go out to the data center, or even some of the water infrastructure? Beyond that, is there a persona that you are thinking about that you can bundle, any potential external partnerships with hyperscalers, asset owners, to unpack that data center opportunity for us? Thank you.

Thanks Joe. Next question, from Chris. Non from Oppenheimer.

Speaker 7: am going to let Nicholas respond in the main, but I will say that I am struck during the quarter by the U.S. AI strategy, which articulates that it needs to include an infrastructure investment strategy for the reasons you described. Of course, this is not limited merely to the place where the data center sits, but the way it is connected up, especially with the electrical grid, that is a particular opportunity for us. The other aspects of the portfolio beyond merely the building and its structures, our structural analysis software especially is used in that. A data center is a small city altogether and includes all the other aspects of the ecosystem you mentioned. Nicholas, you have been looking at this, I think, more in particular.

Hi, good morning. Thank you for taking the question. Um, I want to double click on some of the The Tam analysis and and ask you about the data center opportunity, is there a way to understand sort of the the Bentley systems total addressable Market there, whether it's through energy infrastructure roads that go out to the data center or even some of the water infrastructure. Um, and beyond that is there sort of a Persona that you're thinking about that, you can bundle any sort of potential, external Partnerships with hyperscalers, asset owners, sort of unpack that data center opportunity for us. Thank you.

I'm oh, I'm going to let Nicholas, um, respond in the main. But I will say that I'm

Struck during the quarter by.

The US.

AI strategy. Um,

Nicholas Cumins: Well, I will say, Kristen, the way you are looking at it is the way we are looking at it as well, which is indeed there is a lot of infrastructure related when it comes to data centers that is for the data center itself and then surrounding the data center, as Greg Bentley just explained. These are really more like mini cities or campuses. Whenever you have, let us say, high spatial density with engineering complexity, this is typically a great opportunity for Bentley Systems Inc. So we do offer software to design many aspects of the data center and the surroundings of the data center. You mentioned the road, of course, the distribution lines, the water, and so on and so forth. We also offer software that helps put all of this together, understand the interrelationships between all of these infrastructure assets.

Which articulates that it needs to include an infrastructure investment strategy for the reasons you described and and of course this isn't limited merely to the place where the data center sits. But the way it's connected up especially with the electrical grid that is a particular opportunity for us but the the other aspects of the portfolio Beyond merely the, the building and its structures are are structural analysis software especially is used in that. But but a, a data center is a small City altogether and includes all the other aspects of the ecosystem. You mentioned, but Nicholas. You've been looking at this. I think more in, in particular,

Well, I will say Chris and the way you're looking at it is the way we're looking at, as well. Yeah. Which is indeed, there's a lot of infrastructure related when when it comes to data centers that is for the data center itself and its surrounding the data center as Greg just explained, these are really more like mini cities or campuses, you know, and then whenever you have uh let's say hi spatial density with engineering complexity, this is typically a uh a uh, a great opportunity for us.

Nicholas Cumins: I think what is interesting with the hyperscalers is they are obviously software-first. They understand the power of software. They are quite receptive to the notion of let us make sure that when we design, we design right from the start for operations. Then we make sure that there is an iTwin that is being created at the moment of design, which is used to schedule and manage the construction and which will then be used for the operation of the data center. I am not talking about the inner operation of the data center, obviously, but all the surrounding infrastructure. I think a good, let us say, testament to that is the uptake of SYNCHRO, which is used quite systematically for the construction modeling of data centers by hyperscalers.

Ations and then we make sure that there's a digital twin, that is being created at the moment of design, which is used to schedule and manage the construction entry. So then be used for the operations of the data center. I'm not talking about the inner operation of the data center, obviously, but all the surrounding infrastructure, I think a good, uh, uh, let's say, um, a testament to that is the uptake of Synchro which is used, uh, quite systematically, uh, for the, um, construction modeling of data centers by hyperscalers.

Eric Boyer: Thanks, Kristen. The next question comes from Jason Celino from KeyBanc.

Speaker 6: Great. Thanks. Werner, I do not know if I heard you correctly, but did you say that the free cash flow guidance was moving up $15,000,000 because of the benefits from the OBVA? I know there are a couple of ways of recognizing the benefit. Not to get too much in the nitty-gritty, but is it the accelerated adoption, or should we expect multiple years of benefit?

Thanks Kristen. The next question comes from Jason Selena from KeyBank.

Werner Andre: There will be multiple years of benefits. Jason, the $15,000,000 is for the first year, and it considers that we had prepayments already in the first half of the year. So the normalized annual benefit that we are seeing for 2025 would be approximately $10,000,000 higher than the $16,000,000, but based on the prepayments that we took, this will roll over into the 2026 year. We are still evaluating, but we do not plan on an accelerated adoption. That is just a normalized benefit, if you will. You will see more benefits coming over the following years.

Great thanks. Um, Warner. I, I don't know if I heard you correctly. Um, but did you say that the free cash flow guidance was moving up 15 million because of the benefits from the the obba? Um, I know there are a couple of ways of recognizing the benefit, just, I mean, not to get too much in the nitty-gritty, but this is the accelerated adoption or or should we expect not multiple years of benefit?

it will be multiple years of benefits, uh, Chase and the the 15 million is for the

For the first year and it's considered actually that we had prepayments already in the first half of the year.

So, the normalized annual benefit that we are that we're seeing for 25.

Uh, would be approximately 10 10 million higher than the 16 million. But based on the prepayments that we that we took, this will roll over into the 2026 year.

Speaker 6: OK. Amazing. Thank you.

Uh but we we are still evaluating both with we don't we don't plan on an accelerated uh adoption. So that's just a normalized benefit if you will and then you will see more benefits coming over there, what the following years?

Werner Andre: Yeah.

Eric Boyer: Thanks, Jason. Next question from Siti Panigrahi from Mizuho.

Okay, amazing, thank you. Yeah.

Thanks Jason. Next question from City Panerai from Missoula.

Speaker 7: No, we can't hear you, Siti.

No, we can't hear you speak.

Nicholas Cumins: It's still not on.

Come out. Oh,

Eric Boyer: OK. Maybe we will move on and come back. Can we get Warren Myers from Griffin Securities, please?

Speaker 7: Yes, good morning. Thank you. This is Werner Andre in for Jay Vleeschhouwer. Quick question. Aside from the plan to incorporate Cesium where appropriate in a portfolio, what are some of the other critical development and deliverables for the next 6 to 12 months, even if you don't expect an immediate impact to revenues? Related to that, over the past few months, Bentley Systems Inc has exhibited an uptrend in the number of R&D openings while keeping sales openings flat. Could you comment on the thinking behind those recent numbers as well? Thank you.

Okay, maybe we'll move on and come back. Uh, can we get Warren Myers from Griffin Securities please.

Yes, good morning, thank you. Uh, this is Warren in for J.

Um,

Quick question, aside from the plan to incorporate cesium where appropriate in the portfolio.

What are some of the other critical development and deliverables for the next 6 to 12 months? Even if you don't expect an immediate impact to revenues and related to that over the past few months, Bentley is exhibited an uptrend in the number of R&D openings, while keeping sales, openings flat, could you comment on the thinking behind those recent numbers as well?

Nicholas Cumins: All right. On the first question, let me take a step back and say that our R&D priorities are AI, Cesium, and then integration of Cesium integrated across our portfolio, and then the deeper integration of Cesium with iTwin into a unique platform for the built-in natural environment. With respect to Cesium and our progress there, I think in the last quarter, we talked about EVO, which is our data and compute platform for geoscience data that is coming out of our Seequent business. This one has already embraced Cesium as the main user interface. As I commented in the prepared remarks, we brought very important iTwin capabilities into the Cesium platform, and we announced that at our very first Cesium developer conference.

Thank you.

All right. So on the first question, let me take a step back and say that our R&D priorities are AI.

Cesium and then the integration of a cesium integrated across the portfolio and then the deeper integration of cesium, with itwin into a unique platform for the built and natural environment. Yeah. Um so with respect to cesium and our progress there, so I think in last quarter we talked about evil which is our data and compute platform for geoscience data, uh, that is coming out of our sequin business. And this 1 has already had already embraced cesium as the main user interface. Um, and then as I commented in the prepared remarks, we brought a very important, it twin capabilities into the season.

Nicholas Cumins: The reason why this one is particularly symbolic is you might remember that one of our strategic objectives with the acquisition of Cesium was to leverage the Cesium ecosystem to accelerate the adoption of our iTwin capabilities. There you go now, the iTwin capture capabilities that are used to create reality models, be able to visualize them with Gaussian splats, being able to run AI on it to detect some features, et cetera. All of those capabilities are now immediately available from within the Cesium platform. What is also a great validation of that strategy is that one of the longer-term partners of Cesium, which is EarthBring, a JD which is majority owned by Komatsu in Japan, has agreed with us to expand their partnership from Cesium to iTwin and to adopt iTwin capture and the iTwin platform in order to support their own applications for construction simulation and management.

Platform. And we announced that at our uh very first season developer conference. The reason why this 1 is particularly uh symbolic is you might remember that 1 of our strategic objectives, with the acquisition of season was to leverage the season ecosystem to accelerate the adoption of our twin capabilities.

Nicholas Cumins: Just in the last few days, we released MicroStation 2025. Again, our very core products for generic modeling, which now has built-in the Cesium integration so you can actually visualize your designs in full 3D geospatial context, including, by the way, with 3D photo realistic tiles that are coming from Google, leveraging the same technology of Cesium. Some very exciting progress there. There is more to come. There is the integration of Cesium and Bentley Infrastructure Cloud. A lot of that we will be discussing at our annual conference in a couple of months now in Amsterdam. Then to the second question, which is the fact that you see openings in R&D and you see, however, openings in sales quite flat. I will say probably two things. One is a clear sign that we are able to scale the business without necessarily throwing people at it on the go-to-market side.

Expand their partnership from season 2 win and to adopt, itin capture and the itin platform, uh, in order to support, uh, their own applications for construction. Simulation, and, uh, and management. Yeah, and then, just in the last few days, we released microstation 2025. So, again, our very core products for generic modeling, uh, which now has built-in decision, so you can actually visualize your designs in full 3d geospatial context, including, by the way, with 3D photo realistic tiles, that are coming from Google leveraging. The same technology of of cesium. Um, so some some some very exciting progress there, and there's more to come. There's the integration of cesium, and deadly infrastructure, cloud, and all of that will be discussing at our annual conference, uh, in a, in a couple of months now in, uh, in Amsterdam. Yeah. Um, and then to, um, to the the second question, which is the fact that we, you see

Nicholas Cumins: It speaks a lot to, again, the strengths of our demand environment and the strengths of our products. The other thing I will say is we are quite fast and probably a little faster in hiring go-to-market resources than we are hiring in R&D resources. Our big focus when it comes to hiring R&D resources is AI, which, again, is our number one priority when it comes to investment this year.

Openings in R&D. And you see, however, openings in sales quite flat, um, I will say probably 2 things 1 is a, you know, a clear sign that we are able to scale The Business Without necessary, throwing people at it, on the go to market site, right? So, it takes a lot to again, the strength of our demand environment and the sense of our products. Um, the other thing I will say is we're, you know, quite fast. Uh, and probably a little faster in hiring. Go to market resources than we are hiring in our end resources, you know, um, and our big focus when it comes to hiring R&D.

Resources is AI which again is our number 1 priority when it comes to investment this year.

Eric Boyer: Thanks. The next question comes from Taylor McGinnis from UBS.

Thanks. The next question comes from Taylor McGinness from UBS.

Speaker 6: Hey. Thank you guys so much for taking the question. It seems like you are well on your way to hitting the midpoint or even slightly above the constant currency ARR guide for this year. But in terms of the scenario that could push you to the higher end of the guide to 12.5%, what does that look like? You mentioned the permit reform opportunity earlier on. It sounds like emerging growth opportunities with asset analytics and maybe some of the AI stuff continues to move along nicely. Are there any second-half catalysts that you are particularly excited about that could be a source of upside for us to monitor?

Speaker 7: Taylor, I think you named them, to which I would add that our acquisition strategy this year is focused on asset analytics opportunities rather than broad programmatic acquisition, as had been the case in the past. We are fussy about those, but nonetheless determined about it. We have not had a significant acquisition since last year's Cesium acquisition, which will roll off here in this third quarter. But we are hopeful about such opportunities during the remainder of the year.

Hey, thank you guys so much um, for for taking the question. So it seems like you're well on your way to hitting the midpoint or even slightly above the constant currency ARR guide for this year. But in terms of the scenario that could push you to the higher end of the guide to 12.5%. What what does that look like? You mentioned the permit reform opportunity? Um, earlier on, it sounds like emerging growth opportunities with asset analytics and you know, maybe some of the AI stuff, you know, continues to move along nicely. So, are there any second? Um, half catalysts that you are particularly excited about that. Could be a source of upside for us to monitor

Taylor, I thank you named them, um, to which I would

add that our

Acquisition strategy, this year is focused on asset analytics opportunities, rather than broad programmatic Acquisitions, as has been the case in the past and we're fussy about those and, and, but nonetheless determines about it. And we have not had a significant acquisition, uh, since last year's CDM acquisition, which will roll off here in the, in this third quarter.

Um, but we are hopeful about such opportunities during the remainder of the year.

Speaker 6: Perfect. Thanks so much.

Eric Boyer: Yeah. Thanks, Taylor. The next question comes from Matt Hedberg from RBC.

Thanks so much.

Speaker 6: Hi. Good morning, guys. This is Matt on for Koji Ikeda. I wanted to ask a little bit more about asset analytics. Maybe if you could just help remind us the growth profile there, the run rate today, the key areas of execution focus for that business outside of the programmatic and potentially larger acquisitions in that business line. Then finally, it sounds like there is some seasonality nuance this year. Let me tap the tops from an ARR perspective this quarter and third quarter. Just maybe help us understand the shift in seasonality in 2025.

so, the next question comes from Matthew b****** from Bank of America,

Speaker 7: Matt, I will say that the asset analytics business is not yet of such magnitude that we break it out and track it. What I can say is it contributes a lot of our volatility. Such volatility as we have is largely related to that because the rest of everything is subscription-oriented and renewing floors and ceilings and so forth. In asset analytics, we are chasing the major opportunities in the world because we want to get our elbows out and have those proof points. So they are large and lumpy when they come. We have also discovered that sometimes they last only a year because the asset analytics are during a construction phase of something, and then you have to sell again to the owner-operator constituencies. So we are learning this business as we go.

Hi, good morning guys, this is Matt on for code Gia. Uh, I wanted to ask a little bit more about asset analytics, maybe if you could just help remind us, uh, the growth profile there, the Run rate today, you know, the key areas of, you know, execution, Focus for that business outside of the programmatic and potentially larger Acquisitions in that business line. And then finally, it sounds like there's some seasonality, um, nuanced this year, slightly tougher comps from an our perspective, this quarter, and third quarter, just maybe help us understand, uh, the shift in seasonality, uh, in 2025.

Matt, I'll I'll say that.

Um,

the the business, the asset analytics business isn't yet. No, such magnitude that we break it out and track it. What I can say, is it contributes a lot of our volatility. All such volatility as we have, is largely related to that because the rest of everything is subscription oriented and renewing, floors and ceilings, and so forth and asset analytics. We're, we're chasing the major opportunities in the world because we want to get our elbows out and, and, and have those, uh, proof points. So, they're they're large and lumpy uh, when

Speaker 7: There was reference to the second and third quarters last year in 2024 being when we won the big deals and we are working on a bunch of them now. You may want to speak about one, Nicholas, that has a particular qualitative aspect that we think is auspicious for the future in the case of Blyncsy.

Nicholas Cumins: I will. Before I talk about Blyncsy, which is our road monitoring solution, I will say that with the other finance business we have, which is for cell towers, it has indeed been historically volatile because of the reasons that Greg just explained. I think as that business gets bigger, the volatility will decrease. As we are refocusing on slightly different types of accounts with slightly different use cases. Historically, we have been working a lot with equipment manufacturers, for example, that will use our software to inspect towers before and after the installation of that equipment. More and more, we are targeting the actual owners of the cell towers or the mobile operators. Their use case is different because they actually want to monitor those towers on a continuous basis. Therefore, as we win some of their business, we will decrease the volatility.

Year in 2024 being when we won the big deals and we're working on a bunch of them. Now, you may want to speak about 1 nickels.

Nicholas Cumins: Now, back to road monitoring solution, indeed a very auspicious opportunity here, as Greg just indicated. Traditionally, we are selling to transportation authorities. Those can be long cycles, by the way, but very worthwhile. I think at some point, we will pass a tipping point where there will be so much great examples of success of transportation authorities with our software that others will follow much quicker. We now have one very large global engineering services firm, which is leveraging the capabilities to offer their own high-end value services to a U.S. territory. The reason why we like that a lot is because it fits exactly our strategy of asset analytics, where we do not want to necessarily go after all the owner-operators under the sun. We do want to leverage our strong relationship with engineering services firms.

I I I will uh, before I talk about Blinky which is our road monitoring solution, I will say that with the other phonetics business we have, which is for sale Towers. It has indeed been historically uh, volatile because of the reasons that Greg just explained, I think as that business gets bigger, the volatility will decrease. Um, but also as we are refocusing on slightly different, uh, type of accounts with slightly different use cases, you know? Uh, historically, we've been working a lot with equipment manufacturers, for example, they will use our software, uh, to inspect ours before, and after the installation of that equipment, but more and more, we're targeting the actual owners of the sell tires, or the mobile operators, and their use cases is different, because they actually want to monitor those tires, on a continuous basis. Therefore, as we win some of their business, we will decrease the volatility, but now, back to Road monitoring solution. Indeed a very auspicious, uh, opportunity here as Greg just indicated. Um, traditionally we are, um, selling

To Transportation authorities.

Um, and you know, those can be long Cycles by the way. Uh, but very worthwhile and I, I think, at some point, we'll pass the Tipping Point, where there will be so much, you know, great examples of success of Transportation authorities with our software that others will follow much quicker. Um, but, um, we now have 1, very large Global Engineering Services firm, which is leveraging the capabilities to offer their own uh, in value services to a US 3 3.

Nicholas Cumins: As they diversify their own business beyond product delivery, going into asset operations, and in order to offer these high-value services for asset operations and maintenance, we want to be right there with them, with our software, with our technology, with our platform in order to allow them to do that. So we welcome that very positive development, and we hope it is the first of many to come.

The reason why we like that a lot is because it fits exactly our strategy of analytics where we don't want to necessary to go after all the owner creators, uh, uh, Under the Sun. We do want to leverage our strong relationship with Engineering Services firms and as they divert diversify their own business, uh, Beyond product delivery, going into assets, operations,

Eric Boyer: Fantastic. Thank you.

and and and in order to offer these high value uh services for asset operations and maintenance, we want to be right there with them, with our software, with our technology with our platform in order to allow them to do that. So so we welcome that very positive development and we hope it's the first of many to come.

Nicholas Cumins: Thanks.

Eric Boyer: Let's move on to Wolf Research for the next question.

Fantastic. Thank you. Thanks. Uh let's move on the wolf research for the next question.

Speaker 6: Hey, guys. This is Ivan here for Josh. Thanks for taking my question. Can you elaborate on what drove the slight downtick in NRR? When do you sort of expect that to go back to the double-digit range? Thank you.

Hey, uh, hey guys, this is Evan here for Josh. Uh, thanks for taking my question. Um, can you elaborate on on what drove the, uh, slight downtick in nrr?

Speaker 7: Well, I am going to say first, I think it is teetering between 109% and 110%. If you think of our business generally, half of our NRR or so is from price escalation, the other half variously from the contributors to consumption otherwise. Then there is another 3%, which is from new names on top of the NRR that makes up our ARR growth, as that is 11.5-ish or so percent. So it is all rather consistent, but round up or down, you could say that from 9% to 10%, but I realize that is from one to two digits also. I think it is kind of accidentally in that range. But Werner, would you like to comment more quantitatively than that answer?

Uh and then when do you sort of expect that to go back to the Double Digit range? Thank you.

I I want to say first, I think it's teetering between 109 and 110% if you think of our uh business generally, you know, half of our nrr or so is from Price escalation the other half variously from the contributors to uh consumption otherwise and then there's another 3% which is from new names on top of the nrr that makes up our ARR growth as that

It's about 11 and a half percent or so. Overall, it’s all rather consistent, but you can round up or down.

Werner Andre: I think you are spot on. If I go to the numbers, I think it was like 9.45, rounding down to 9. It is within that 9% to 10% range, and it did round down to 9. So there is nothing really significantly driving kind of a shift from 10% to 9%. It is within that range, and that is a solid range for us.

You could say, but from 9 to 10 percentage from 1 to 2 digits. Also, uh, I think it's, it's kind of, uh, accidentally in that in that range. But, uh, Garner, would you like to comment more quantitatively, than, than than? Yeah. I think, I think you spelled out like this. If I go to the numbers, I think it was like 9.45,

Coming down to 9. It is within the 9 to 10% range, and it has dropped down to 9. So there's nothing.

Speaker 7: Something to remember about NRR is it looks back altogether fully two years. There is a lot of China in that, China pressure in that still. At some point, the China ARR down draft has to slow down because it is down to only 2% of ARR at the moment. But when you look back fully a year ago versus two years ago, it is pretty significant.

Really significantly driving kind of a shift from 10 to 9. It's it's within that range and that's a, that's a solid range for us.

I guess update to remember about nrr is it look looks back, altogether, fully 2 years. Um, and there's a lot of China in that, uh, China pressure in in that still, um, this at some point, the China ARR, uh,

Downdraft has to slow down because it's down to only 2% but they are are at the moment. But when you look back fully year ago versus 2 years ago, it's pretty significant.

Eric Boyer: Thanks. The last question will come from Mizuho Securities.

Thanks. Uh, last question will come from mujo, securities.

Werner Andre: For the earlier mixed-up wrong button, but excellent. Thank you. We also look at other vertical names like SCADA and SYNCHRO. One of the common themes we hear across all the verticals these days is shortage of engineers and how AI is helping to kind of help that problem through agentic AI. That is like the rave in the AI world these days. Given all the acquisitions in Cesium and the inroads into the AI world, I am curious how you are thinking about agentic AI in your products going forward. Where are you in the process right now? What is your vision going forward? How does it help alleviate the shortage?

Or.

For the earlier mixed up wrong button.

But uh, excellent. Thank you. So that, um, so we we also look at uh other vertical names like circadence synopsis and uh, 1 of the common themes. We hear across all the verticals. These days is shortage of Engineers and how AI is uh, helping um, to to kind of like help that problem through agentic AI that is like the Rave in AI World these days. So uh, given all the Acquisitions and and and CSM and the, the inroads into the AI.

Speaker 7: Siti, I am going to ask Nicholas Cumins to respond. This notion of quantifying consumption volume, number of engineers especially, is a reason that I wanted to look back and get new data from Cambashi on the census of engineers. Of course, the past five years will not be like the next five years with agentic AI. In effect, we have been experiencing some of what comes about when there are fewer users. I think there are fewer users in the advanced economies in those level one countries. There are fewer, but they are spending more. You cannot assume there is going to be more of them or that they will be spending more time on doing one thing because for one thing, they are going to be having their agent spending some of the time.

Into the AI world. I'm curious how you're thinking about agentic AI, in, in your products. Uh, going forward, uh, where, where, where are you in the process right now? And what's your vision going forward? And uh, how does it uh, help Elevate the shortage?

CT. I I I'm going to ask Nicholas in the main to respond, but

that that this notion of

quantifying consumption volume number of Engineers especially is a reason that I wanted to look back and get new data from cam bashing on the census of

Engineers. And, of course, um, the past 5 years, won't be like the next 5 years with magenta, AI, but, um, in effect we've been, uh, experiencing some of what comes about when there are

Fewer.

Speaker 7: I know Nicholas Cumins is going to talk perhaps about some of the directions commercially that that implies. Generally, what I am confident about is that they will each spend more. The particularly unique aspect of this for infrastructure engineering is that the bulk of our end markets, or half of them, the engineering firms themselves have primarily been charging per hour. AI is going to change the ways in which they will need to monetize their services. We can help them and participate with them in ways of getting compensated for value over time. In other words, we are not on the other side of that. We are on the same side of that with our users and helping them to generate this step function. They need to generate more value because there are fewer of them doing more work.

Users. I think there are fewer users in the advanced economy. So in this level 1 countries um there are fewer but they're spending more. But you can't assume there's going to be more of them or that they will be spending more time on doing 1 thing. Because for 1 thing, they're going to be having their agents spending some of the time and and I know Nicholas is going to talk perhaps about some of the directions um commercially uh that that implies. Uh but generally what I'm confident about is that they'll each spend more the, the particularly unique, um, aspect of this for infrastructure engineering, is that the bulk of our end markets or half of them, the engineering firms themselves, have primarily been charging per hour and that a AI is going to change the ways in which they will need to monetize their

Speaker 7: But they need to be paid for that step in valuation. So we will be measuring things in different ways, in incremental ways, and so forth that I know Nicholas Cumins and team have already been exploring as we are about to bring one AI native, if I had to use a string-stream term, but one AI-based product to market, as you know or might know. Nicholas, perhaps over to you on that.

Services. Um, so we can help them and participate with them in in ways of getting compensated for Value over time. In other words, we're not on the other side of that. We're on the same side of that, with our, with our users and helping them. To generate this step function, they need to generate more value because there are fewer of them doing more work, but they need to be paid for that step in, in valuation. So we'll be measuring

Nicholas Cumins: Siti, thank you for asking that question. It is great to end this conversation with this question because it is so much about the future of infrastructure overall. AI comes up in every CEO conversation I have with engineering services firms. It is really top of mind because of this backdrop we have been discussing quite a lot. So much demand, yet so few engineers to do the work. Engineering services firms are actually leaning in to adopt AI. It starts with simply using AI for normal business tasks, like I am sure many of you here in the call are doing already. It is also more and more leveraging AI for engineering tasks. It will start there by leveraging whenever they can capabilities that are coming from software vendors.

Things in different ways and incremental ways and so forth. That I know, Nicholas and team have already been exploring as we're about to bring 1, uh, AI, uh, Native FedEx, a strict stream term but 1, uh, AI based product to Market as, you know, or might know. Um, so, Nicholas Pratt's over to you on that.

Nicholas Cumins: We talked about one very large global engineering services firm leveraging our own solutions for road monitoring, which is Blyncsy for asset analytics. Of course, they are also very, very interested in leveraging the capabilities that we are building for design. Coming to agentic AI now, I think this is where we are going to see indeed a step function in productivity from those firms. We are talking about that core market. We are talking about the core engineering design work, where through AI, we can automate all the mundane tasks that are just sucking time away from engineers to do what they really like to do, what they are really supposed to do, for example, automating drawings, production, et cetera. We announced early access to our site engineering application called OpenSite+ at Y last year. We will talk about the progress we have made at Y this year.

CTA. Thank you for asking that that question. And it's great to uh to end this conversation with this question because uh it is so uh, uh, so much about the future of of, of infrastructure overall. Yeah, AI comes up in every CEO position. I have with Engineering Services, it's really top of mind because of this backdrop, we've been in this discussion in quite a lot. Um, so much Demand yet. So few, so few Engineers to do to do the work and Engineering Services systems are actually leaning in to adopt AI. Um, it it start with simply using I for normal business tasks. Like I'm sure many of of you here in the in the color are doing already, but it's also more and more leveraging AI for engineering tasks. Um, it will start there by leveraging whenever they can capacity that are coming from software vendors.

Nicholas Cumins: The engagement with accounts with this product is truly impressive. I think everybody sees the potential with this product itself, but everybody sees the potential beyond for other engineering disciplines, for other engineering applications. While we are hardening that product to make it available for a more general availability, we are also working actively and expanding those capabilities to other engineering applications. The last thing I will say is we see many engineering services firms who are building up their own teams, whether it is AI specialists with data scientists. They are creating their own AI agents. Here, I think we are very well positioned to support because many of them, and we would like all of them, are leveraging Bentley Infrastructure Cloud, where they bring all of their engineering files that are coming from all sorts of vendors, very often Bentley, sometimes not Bentley. Our platform is completely open.

Hi uh, Early Access to our site. Engineering application called open site plus aty last year and then we'll talk about the progress we've made. Uh, uh, at why I this year, the engagement with accounts with this product is is is truly impressive.

Nicholas Cumins: It can ingest all sorts.

Speaker 1: file formats, but the more important thing is when we ingest those files, we basically map the data in those files to schemas so that we make that data available for AI. We are beautifully positioned to help them tap into past designs in order to provide a context for the AI agents to make recommendations going forward. We are really very much at the beginning of this, but we are all very encouraged to see those developments. We are very excited about it. We will discuss it more at our annual conference later this year.

Um, I think everybody sees the potential with this product itself, but everybody sees the potential beyond for other engine disciplines for all the engineering applications. So, while we are hardening that product to make it available for a, a, a, a more General, a very validity. Uh, we are also, uh, you know, working actively and expanding those capabilities to other engineering applications, right? And then, lastly, I will say, is we see many Engineering Services firms who are building up their own teams with, uh, uh, AI Specialists with data scientists. They're creating their own AI agents and here. I think we are, you know, very well. The position to support because uh, many of them and we would like all of them to are leveraging that infrastructure Cloud where, you know, they bring all of their uh engineering files that are coming from all sorts of vendors. Very often Bentley sometimes not Bentley. Now our platform is completely open. It can inject all sorts of file formats but the more important thing is when we ingest those files we basically map the data in those files.

Speaker 1: What I will say is that, and I will end there, the potential productivity gain for everyone involved in the ecosystem of infrastructure through AI are such that we are going to see value redistribution. We are going to see business models changing and potentially our own business models changing in order to support it.

To ski mask. So that we make that data available for AI. So we're beautifully positioned to help them, you know, uh, tap into past designs, uh, in order to provide a context context for AI agents to make recommendations going forward. Yeah, now we're really very much at the beginning of this, um, but we're all very encouraged to see those developments. We're very excited about it. Uh, we'll discuss it more at at our annual conference uh, uh, later this year, what I will say is that the enable end there, the potential productivity gains for everyone involved.

Eric Boyer: Great. Thank you.

Uh in the ecosystem of infrastructure, through AI are such that we're going to see value redistribution. We're going to see business models changing and potentially your own business model changing in order to support it.

Werner Andre: Thanks. We have one more. Dylan popped on from William Blair. Go ahead, Dylan.

Great. Thank you.

Nicholas Cumins: Thanks, Eric. Hey, guys. Maybe Nicholas, to that point in particular as well. It sounds like the idea of permitting reform coming through incremental productivity and maybe conviction that you are seeing from customers with higher floors on the E365 callers, if you will. I wonder how you think about that evolution playing out from a pricing perspective as they are maybe able to work through those backlogs a bit faster, draw down on that spend faster. Does that mean accelerated growth for BENTLEY? Maybe is it visibility into the durability of that growth? How should we be thinking of the implications within the pricing structure?

Thanks, we have 1 more, Dylan popped on from William. Blair go ahead. John.

Thanks sir. Hey guys um maybe Nicholas to to that point in particular as well too, it sounds like um the idea of Permitting reform kind of coming through incremental productivity, and maybe conviction that you're seeing from customers with with higher floors on, kind of the e365 callers. If you will wonder how you think about, kind of that Evolution playing out from a pricing perspective, as there may be able to work through those backlogs, a bit faster, draw down on that spin faster. Does, that mean, accelerated growth for Bentley? Maybe is it visibility into the durability of that growth? Like how should we be thinking? Uh,

Speaker 1: I think so the confidence that we are seeing from our accounts, whether large or small, is what is really playing out at the moment of renewals. With our larger accounts, this is where we agree together on both higher floors and higher ceilings. Of course, they come together in the low double-digit percentage, let us say around 10%. So it is just a sign of the confidence, right? I think from a pricing standpoint, we always make sure that we capture our fair share of the value that our software provides. When it comes to our applications overall, we have been quite consistent with our price escalations in the mid-single digits. We were quite reasonable at the time of very high inflation not to go too high. Therefore, we were able to continue to increase our prices in the mid-single digits.

Of the implications, uh, within the pricing structure.

I mean, so the the conference that we're we're seeing from our accounts, whether um, a large or small is uh, uh, what's really playing out at the moment of renewals and with our larger accounts, this is where we agreed together on both higher floors and higher ceilings, of course, that come together, you know, in the low double digit percentage, let's say around 10%, uh, so just a, just a sign of the confidence, right? I think from a pricing standpoint. We always make sure that we we, we, we capture our fair share of the value that our software provides.

Speaker 1: Now, when it comes to AI, we are going to see if the way we—I am not talking about the price point now, but the way we price, the metrics we use are adapted. For the most part, our applications are based on users. They are either subscription when it comes to our SMB business or their application days usage when it comes to our enterprise accounts on E365. Of course, we have a number of applications targeted for asset operations that use different metrics like assets, a number of assets. Definitely the case of AssetWise historically and the case of the new applications we have for asset analytics that we talked about, road monitoring and self-booth hours.

And when it comes to our applications overall, you know, we've been quite consistent with our price escalations, in the mid single digits, uh, we were quite reasonable at the time of very, you know, High inflation. Not to go too high and therefore, we were able to continue to increase our prices in the mid single digits. Um, now when it comes to, uh, AI, uh, we're going to see if uh, uh, you know, the way we I'm not talking about the, the price point now, but the way we price, the metrics we use are adapted, you know. Um, you know, for for, for, for, for the most part, our applications are are, are, are are based on users. Um, they are either subscription when it comes to our CV, business or their application days usage, when it comes to our Enterprise accounts on e365, you know, of course we have a number of applications targeted for asset operations that use different metric like assets. You know number of assets. Definitely the case of assets. Why? Historically

Speaker 1: But now, when it comes to AI for design, the feedback that we are getting for the first accounts that are testing OpenSite+ is that maybe indeed right now it is a bridge too far to change completely the pricing metric. We still need a user component, but maybe application days usage is not the most appropriate pricing metric because the value of the software cannot really be necessarily translated in the actual usage and number of days. The productivity gains are so much that we may need something else. So with them, at least the agreement is we will start with a subscription, term-based subscription, and then we will have an add-on or additional charges that kick in as soon as the usage of AI is extensive and goes way beyond what a normal engineer will be able to do in a given time.

Speaker 1: That is going to be an evolution, right? So we are doing this not in isolation. We are doing this constantly discussing with our accounts on what is appropriate going forward. We are seeing openness for alternative pricing metrics going forward, but this is going to take a little while. We are very much early stage.

With a subscription to subscription and then we will have a you know add-on or additional charges that kick in as soon as the extension the the usage of AI is expensive and goes Way Beyond what a normal engineer will be able to do in a, in a, in a given time. Yeah. Uh, but that's going to be an evolution, right? So we're doing this, not in isolation. We're doing this constantly discussing with our account. So what is appropriate going forward? We're seeing opens for athentic pricing metrics going forward.

But this is going to take a little while we're very much early stage.

Eric Boyer: Very helpful. Thank you.

Greg Bentley: I will make sure that we do not fail to do a commercial for our Year in Infrastructure conference in Amsterdam in October. Many of you have attended and found it very worthwhile. Just to tease a bit this year, the Going Digital Awards, the finalists are all there and will be presenting their projects. We asked them each this year how they were using AI. I was very impressed with the things that we did not anticipate that we heard in terms of ways in which they are using AI. They will be talking about that in their presentations. We announced the finalists earlier this week. Of note, I think I have this right, there are nine from the U.S., 10 from Europe. That number put together, 19, I think it is, or 18 from Asia. It is just a picture of where in the world innovation is occurring.

Very helpful. Thank you.

I I will, um, make sure that we don't fail to

Do a commercial for our urine infrastructure conference in Amsterdam in October. Um, many of you have attended and found it very worthwhile um, just to tease a bit. This year, the going digital Awards. The finalists are all there and we'll be presenting their

Uh, presenting their projects. Uh, we asked them each this year, how they were using Ai. And, and I was very impressed with the, uh, the things that we didn't anticipate that that we heard in terms of ways in which they are using, uh, Ai and they'll be talking about that at the, uh, at the, in their presentations. Um, and we announced the finalists, uh, earlier this week and of note, uh, I think I had this right there.

Um, 9 from the US.

10 from Europe and then, uh, that number put together, uh, 19. I think it is or 18 from Asia. So it it's just a picture of, uh, where in the world, um,

Greg Bentley: I hope you will try to join us there in Amsterdam. One last thing as we have time here, the beginning of your question was about permitting reform. Here in the U.S., there is not going to be apparently one big beautiful permitting reform bill, but everything that is going on is encouraging and enabling and accelerating infrastructure investment generally, but especially for the electric grid. I like to say that that data center is not the main reason for that. Data center just being added at the margin to what is already an overtaxed electric grid for reasons that data center is having to run at even greater capacity beyond design capacity with issues of resilience and so forth that you have seen elsewhere in the world. Those are what it feels like.

Innovation is uh, occurring. Um,

And and I hope you'll, uh, try to join us there and Amsterdam. Um, what, what? Last thing as we have time here about in the beginning of your question was about permitting reform and you know, here in the US

There's there's not going to be apparently 1, big, beautiful permitting Reform Bill but it's it's everything that's going on. Uh is is encouraging and enabling and accelerating uh infrastructure investment generally, but especially uh for the electric grid, and I like to say that that uh, data center isn't the main reason for that data center just being added at the margin to what is already an overt tax electric grid, for reasons. That data center is having to run at even greater

Greg Bentley: Nicholas Cumins mentioned, in addition to Power Line Systems, Seequent seeing green shoots as well with new mining. We hope it would be too soon to call a change there, but we may be reporting further about that at Year in Infrastructure as well, I hope. I hope to see you there. I am not sure I will be there in favor of Nicholas, but it will be well worth hearing more about the subject we have been talking about today in October in Amsterdam.

Capacity, Beyond design capacity, with issues, of resilience and so forth that we've seen elsewhere in the world. So those are, those are

What what it feels like and and and Nicholas mentioned in addition to Powerline systems sequent. Uh

Werner Andre: Thanks, Greg. That concludes our call today. We thank you for your interest and time in BENTLEY SYSTEMS. Please reach out to Investor Relations with further questions and follow-ups, and we look forward to updating you on our performance in the coming quarters.

seeing green green shoots as well with new mining. We hope that we think too soon to to call a change there but we may be reporting uh further about that at year and infrastructure as well. I hope and I hope to see you there. Bye. I'm not sure I'll be there uh in favor of uh Nicholas but it will be well worth uh hearing more about the subject. We've been talking about today uh in uh in October in Amsterdam.

Greg Bentley: Thanks.

Thanks Greg that concludes our call today. We thank you for your interest in time in Bentley systems. Please reach out to investor relations with further questions and follow-ups and we look forward to updating you on our performance. In the coming quarters.

Eric Boyer: Thank you.

Thanks.

Thank you.

Speaker 6: Goodbye.